UK property real estate investment trust (REIT) Picton has completed the freehold acquisition of Madleaze Trading Estate, located in central Gloucester for £13.1 million.
Adjacent to Gloucester Quays Retail Park and the Gloucester and Sharpness canal, the property comprises 18 industrial units totalling 304,000 sq ft on a 10.3 acre site. The estate is let to eight occupiers and currently includes two vacant units, which are to be refurbished prior to re-leasing.
The total rental income is £0.75 million per annum, equating to only £2.74 per sq ft. This is expected to rise to £0.86 million once the estate is fully let and has the potential to increase further as rents are reset to current market levels.
The purchase price reflects a net initial yield of 6.1% and a low capital value of £44 per sq ft, which is below the estimated reinstatement cost.
The Company has funded the acquisition using its revolving credit facility and the proforma loan to value will increase to 22 per cent post acquisition.
Michael Morris, Chief Executive of Picton, said: “The estate offers short-term potential for income and capital growth through leasing vacant units and capturing the upside from such a low rental base. We intend to further improve and reposition the estate to widen its appeal for new and existing occupiers.”
Madleaze Trading Estate is home to a number of businesses,including JDR Karting.
Picton owns a range of property assets, including Tower Wharf, Cheese Lane, Bristol, Gloucester Retail Park, Eastern Avenue, Gloucester and 53-57 Broadmead, Bristol.